As an NRI HNI in Dubai planning succession for family wealth, should I consider a UAE foundation? --Name withheld on request
In simple terms, it is a separate legal entity that can hold assets for the benefit of family members or specified purposes. A foundation typically has no shareholders or members and is therefore often described as an orphan structure.
The structure usually involves four key roles. The founder sets up the foundation and contributes assets to it. The council manages the foundation and administers its assets in accordance with the governing documents. The guardian, where appointed or required, supervises the council and helps preserve the founder’s intent. The beneficiaries are the persons or classes of persons for whose benefit the foundation is established.
The foundation is governed by two principal documents: the charter and the bylaws. The charter is the constitutional document of the foundation. The by-laws contain the more detailed and usually private instructions on governance, control, distributions and administration. In practice, much of the real succession planning sits in the bylaws.
At first glance, a foundation may look like a trust: both can ring-fence, hold and manage assets for beneficiaries. The real distinction lies in ownership. In a trust, legal title sits with the trustee, who holds assets for the beneficiaries. In a foundation, the foundation itself owns the assets and acts through its council or governing body. That separate legal personality can make foundations particularly relevant for succession, asset protection and intergenerational wealth preservation.
UAE foundations are available through jurisdictions such as ADGM, DIFC and RAK ICC, each offering its own legal framework and governance architecture.
Under the UAE corporate tax regime, a qualifying family foundation may apply to be treated as fiscally transparent and not taxed in its own right, subject to meeting the conditions. Broadly, this means that the tax consequences are examined at the level of the relevant beneficiaries or underlying persons, as if the assets or income were held or earned directly by them. Given the absence of personal income tax in the UAE, this may be efficient for family wealth-holding structures in appropriate cases. However, the treatment is not automatic and depends on the foundation’s constitutional documents, activities, assets and beneficiary profile.
A UAE foundation should not be viewed in isolation. It must be aligned with a local will and the family’s broader estate plan; otherwise, the structure may look elegant on paper but fall short when control and wealth must actually pass.
Rohit Jain is the managing partner, and Keshav Singhania, head of Private Client at Singhania & Co.
